Investment guru Ken Fisher's stock picks have beaten the market for the past two decades. So when Fisher makes big moves, investors of all size pay attention. Luckily, money managers must reveal their stock maneuvers every quarter in their SEC 13F filings. Here are three of Fisher's recent picks.
Fisher was very bullish on the banking sector during the third quarter. His confidence extended into the fourth quarter, when he initiated his largest new position in Lloyds Banking Group (NYSE:LYG). Lloyds is a U.K.-based financial services group whose businesses provide banking and financial services in the United Kingdom and other locations overseas. A strengthening European economy and optimism regarding consumer and business lending have helped recover Lloyd's stock from the doldrums of 2008. Lloyds' stock has risen nearly 80% in the past 12 months, pushed up mostly on news that the bank is beginning to emerge from government ownership and on hopes it will soon start paying a dividend. Lloyds more than doubled underlying profit and improved capital strength in 2013 -- both likely reasons Fisher initiated such a large position in the bank's stock.
Fisher bought several transportation stocks in the fourth quarter, including Iowa-based Heartland Express (NASDAQ:HTLD). Heartland operates as truckload carrier of commodities in the U.S. and transports freight for shippers using late-model equipment and a combined fleet of company-owned and independent contractor tractors. During the second quarter of 2013, Heartland Express missed estimates on revenues. Then, in November, the stock popped on news of its acquisition of Gordon Trucking. The deal is expected to generate Heartland $1 billion in 2014 revenue, save $30 million in synergies by 2017, and build the combined company into the fifth-largest asset-based truckload fleet in North America. Fisher liked what he saw in the potential of this short- to medium-haul truckload carrier, backed up his own truck, and loaded it with $18 million worth of shares.
Fisher didn't just stick with long-haul highway trucking companies for his additions in this sector last quarter. He also entered a new position in Atlas Air Worldwide Holdings (NASDAQ:AAWW), which provides a range of outsourced aircraft operations and related services. The New York-based company operates aircraft on behalf of international airlines, freight forwarders, and the U.S. military. This beaten-down stock currently trades near its 52-week low. Part of Atlas Air's troubles come from British Airways returning three aircraft and terminating a long-standing contract. An expedited drawdown of troops in Afghanistan is also having an impact on the company. Atlas expects earnings per share to suffer by about $0.70 due to bringing home fewer troops this year. A silver lining for Atlas Air, the company bought back nearly 7% of outstanding shares in 2013, while shares traded less than tangible book value.
Lloyds Banking Group, Heartland Express, and Atlas Air Worldwide Holdings possess forward price-to-earnings ratios of 11, 18, and nine, respectively. By comparison, the P/E ratio of the S&P 500 is currently 18, signaling Lloyds and Atlas Air may be undervalued and Heartland Express is likely fairly valued. The Motley Fool CAPS community rates both Heartland Express and Atlas Air two-star (out of five) stocks. Meanwhile, our CAPS community has a more favorable outlook for Lloyds, which it's given three stars.
Fisher is certainly feeling bullish on one distressed bank and two transportation companies right now. But don't take his opinion as the last word. Conduct your own research and formulate your investing thesis. You'll be a better investor for it.
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Nicole Seghetti has no position in any stocks mentioned. Follow her on Twitter @NicoleSeghetti. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.